1997, Bangkok’s Rafabhat Institute Suan Dusit took a poll of 1,648 Thai children
under the age of 15. The survey asked the children to identify the IMF, the
International Monetary Fund. A quarter knew what the IMF was. About 30% believed
that the IMF was an Unidentified Flying Object, a UFO.
those who think this is funny may want to look outside the windows or else into
the mirror. The body snatchers have commenced their invasion. The Eagle has
landed. A host of acronyms (IMF, FDI, GATT, MAI, WTO), a brood of anonymous
bureaucrats, technocrats. A childhood friend becomes the expert of a country in
Central Asia — he failed geography in school. But he is good, all things
remaining equal, at economics. The Chicago Boys, the Sachs effect, the Wharton
graduates. The index of reason is the double entry account book.
Thai children are perhaps not so unreasonable after all. Thailand, by 1997, was
at the tail end, to put it mildly, of an unsustainable financial boom: 90% of
Thailand’s wealth resides in Bangkok alone, whilst farmers comprise 60% of the
working population and hold only 11% of the wealth. During the ‘boom,’ the
automobile industry grew astronomically in Thailand, as the country became the
third largest consumer of Mercedes Benzes in the world. As Thailand’s
merchandise exports began to plummet (from 22.4% in 1994 to 0.1% in 1996), its
economy entered a crisis. Enter the IMF with a draconian set of rules. The
austerity program put into place led to massive protests, including the erection
of a ‘village’ outside Parliament House in early 1997.
South Korea, during the trauma of 1997, the IMF entered the lexicon not as a
UFO, but in Kavaljit Singh’s words, ‘as a synonym for gloom, doom and despair.’
The ‘IMF Era’ refers to a ‘period of national humiliation.’ The ‘IMF Sale’ is a
bargain for few buyers, ‘IMF Fashion’ is used clothing, and ‘IMF Syndrome’ is
fear of future unemployment.
IMF over the past few years has worked as the advance guard of the WTO. In
December 1997, the IMF’s bailout program for South Korea included the following,
very revealing, statement: ‘Timetables will be set, in compliance with WTO
commitments, at the time of the first review, to eliminate the import subsidies;
eliminate restrictive import licensing; eliminate the import diversification
programme; and streamline and improve the transparency of the import
certification procedures.’ The Indonesia bailout package speaks of
‘liberalization of foreign trade and investment’ as a condition for the IMF
push to insert conditions such as ‘freer’ markets and trade indicates an
interest by the IMF to open access for transnational corporations to financial
markets. But it also indicates that the IMF is operating outside its previous
structural adjustment framework in order, perhaps, to do the advance work for
the WTO. James Tobin, at Yale, for instance, notes that ‘it is hard to escape
the conclusion that the countries’ currency distress is serving as an
opportunity for an unrelated agenda — such as the obtaining of trade
concessions for US corporations and expansion of foreign investment
are private sector firms interested in investing in what the UN calls the Least
Developed Countries (LDCs)? Are they interested in the development of these
countries, in the well being of the people of these regions? Or do they require
these regions to turn a profit on their financial holdings? For several years,
interest rates in the advanced industrial countries have been rather low when
compared to the rates of return in the LDCs. Institutionalization of savings and
increase in the investor base (through mutual and pension funds) creates a
larger fund of money that needs to turn a profit. As the LDCs, under pressure
from the IMF and many of their corrupt governments, liberalize their financial
markets, these become a haven for the speculator.
speculation began in the mid-1970s, when LDCs began to dismantle capital
controls to draw in commercial cash in order to offset increased oil prices. But
in the 1990s, we have seen a real expansion in private investment in the LDCs.
In 1996, net inflow of private capital into LDCs was six times greater than in
1990. Of total foreign direct investment, 40% goes to LDCs (it used to be 15% in
1990), with the LDCs taking receipt of 30% of the global portfolio equity (2% in
1990). This is no redistribution of global wealth (10 countries received over
90% of the inflows) nor is it a productive use of capital (since it mainly
traffics in speculation, so-called ‘hot money’);. The turmoil of SouthEast Asia
is sufficient illustration of these trends.
WTO was to meet ‘peacefully’ and ‘quietly’ in Seattle to further the cause of
‘free trade’ and some form of agreement on investment (despite the public
pressure against the Multilateral Agreement on Investments). The United Nation’s
Conference on Trade and Development (UNCTAD) Report from 1998 notes that the
LDCs would lose $600 million per year if the WTO agreement comes into effect.
Consider that 48 of the LDCs hold 10 percent of the world’s population, but only
1 percent of the world’s wealth. The average income in these LDCs is less than
it was in 1980. In 43 of them, the average income is less than it was in 1970.
The debt has also increased to $215 billion today, from $55 billion in 1980.
Things look pretty grim, with the WTO even grimmer.
it is time to blow off the dust from your volume of Capital I. Remember where it
quotes an authority on page 926 (my edition is the Penguin Classic) to the
effect that ‘with adequate profit, capital is very bold. A certain 10 percent
will ensure its employment anywhere; 20 percent will produce eagerness; 50
percent positive audacity; 100 percent will make it ready to trample on all
human laws; and 300 percent and there is not a crime at which it will scruple,
nor a risk it will not run, even to the chance of its owner being hanged.’
the world watches as a host of human beings take the piss out of the WTO in
Seattle, home of Microsoft and other predatory firms. All sorts of groups
gathered to do damage to the ‘Emerald City’; reports in the world media hearken
back to those pictures of Bull Connor’s dogs tearing into brave protestors for
Civil Rights in Birmingham, Alabama. As the WTO gets a bit of egg in its face,
let us not forget its advance guard, the IMF. Under Michel Camdessus’ watch the
IMF entirely capitulated to transnational corporate interests. His resignation
has drawn the US into pitched battle to get one as keen as he was to foster the
power of Big Money. From Seattle to Washington, DC — from the WTO to the IMF:
Basta to Finance Capital!